People born in the 1960s and 1970s face becoming the first generation since the Second World War who will be worse off than their parents in retirement, a new study has warned.

The children of these decades are less likely to own a property, will have smaller state and private pensions, and have no more savings or income than their predecessors.

The only way in which they are better off is that they believe they are more likely to receive an inheritance, the Institute for Fiscal Studies (IFS) economic think-tank found.

Only those who receive a large bequest from their parents or grandparents can expect to enjoy a more comfortable retirement than the generations who came before them, the report concluded.

However, experts cautioned that in many cases old-age care costs will eat up much or all of the money that pensioners had hoped to leave their children despite a Government pledge to introduce a £72,000 cap on the bills.

The findings represent an end to the steady rise in incomes and living standards enjoyed by successive generations since the end of the Second World War.

The IFS study found that those born in the 1960s and 1970s actually earned more in early adulthood than their forebears did, but had failed to build up bigger savings pots because they spent all the extra money on maintaining a better lifestyle.

At the age of 30, people born in the 1970s were paid three-quarters more than those born in the 1940s took home at the same stage in their lives.

But the younger generation put away about £60 a week less than those who grew up in the immediate post-war period as savings rates declined significantly across all age groups from the late-1990s onwards.

On top of this, salary growth has slowed down over the past decade, in particular as a result of the financial crisis.

This meant that people born in the 1960s and 1970s saw their incomes stagnate at a time of life when their predecessors received significant pay increases.

The closure of many company final salary pension schemes has also hit the younger generations hardest.

In 1997 final salary plans, which typically offer more generous retirement incomes than alternative “defined contribution” schemes, made up nearly three-quarters of all private sector pensions but by 2011 this figure had fallen to less than a third.

Changes to the state pension will also result in future pensioners receiving less than those born in 1940 do, with moves to take away an earnings-related element hitting higher earners particularly hard.

Those born in the 1970s are also taking longer to get onto the housing ladder, with the rate of home-ownership in this age group falling back to about two-thirds compared to a peak of four-fifths for people born in the 1940s and 1950s.

The growing wealth of today’s retirees has led their children to bank on getting a financial windfall when their parents die.

Just 28 per cent of people born in the early 1940s have already received or expect to receive an inheritance, compared to 70 per cent of those born in the late 1970s.

Andrew Hood, one of the IFS report’s authors, said: “Since the Second World War, successive cohorts have enjoyed higher incomes and living standards than their parents.

“Yet the incomes and wealth of those born in the 1960s and 1970s look no higher than the cohorts who came before them. As a result, younger cohorts are likely to have to rely on inheritances to be better off in retirement than their predecessors.

“But inheritances are unequally distributed, with households that are already relatively wealthy far more likely to benefit.”

Tom McPhail, head of pensions research at Hargreaves Lansdown, the financial services provider, said many people expecting to be bailed out in their old age by large inheritances from their parents would be disappointed.

He added: “Care home costs can run to tens of thousands of pounds a year. So if you have two parents who spend a number of years needing intensive care home support, that can consume a very significant inheritance before it ever reaches you.

“People born in the 1960s and 1970s are going to be the first generation that have not been through the bulk of their adult lives in final salary pension schemes, so they are going to lose out significantly in that regard, and more so people born in the 1970s.

“We have hit the high point of the pensions system and we are going down the other side now.”

However, Dr Ros Altmann, a pensions expert, questioned the analysis and suggested that the picture need not be so bleak if younger people embraced changes in working patterns and planned to retire later.

She said: “There are still opportunities for people in 40s and 50s both to save and work longer to give themselves a better lifestyle in later life.

“We need to get away from this idea that it should be an aspiration for people to stop work in their 60s, when they are relatively young and fit. That is not going to be a particularly great life. If you are working part-time, that is going to be a better life.”

A Government spokesman said Ministers were "committed to protecting pensioners", adding: "In addition to introducing the triple lock on the basic state pension we have also protected a number of pensioner benefits, for instance free bus passes and TV licences.

"We are reforming the UK's state pension system to be more sustainable for the future and widening access to a workplace pension.

"These combined reforms will improve the incomes of nine million people currently facing inadequate income in retirement."